A judge threw out obstruction of justice and the second of three Sarbanes-Oxley charges against Richard Scrushy on Thursday, a day after his defense rested without calling the fired HealthSouth Corp. chief to testify in his corporate fraud trial.
After repeatedly peppering government attorneys with harsh questions, U.S. District Judge Karon Bowdre said jurors shouldn’t be allowed to consider a charge accusing Scrushy of trying to persuade longtime aide Bill Owens to sign a false financial certification in March 2003.
Bowdre said prosecutors had not proved any “overt acts” of a crime, despite secret FBI recordings that the government said showed Scrushy pressuring Owens to sign the document.
“At best the government has presented statements from the defendant on tape which are equivocal,” the judge said. Scrushy’s comments to Owens on the recording “are not criminal” on their own, she said.
Ruling from the bench during a hearing, Bowdre also granted a defense motion to dismiss an obstruction of justice count.
Bowdre continued hearing arguments on whether to dismiss more than a dozen additional charges against Scrushy, including 10 counts of money laundering. Scrushy also is charged with conspiracy and multiple fraud counts.
Jury deliberations are set for Tuesday after closing arguments on Monday.
Congress passed the Sarbanes-Oxley law in 2002 amid a wave of corporate frauds, and Scrushy in 2003 became the first CEO charged under the law. He was accused of three violations under the act.
But the judge threw out one of the three Sarbanes-Oxley charges after the prosecution rested, and her decision Thursday left only one of the charges for jurors to consider: false certification of financial results in August 2002.
Prosecutors charged Scrushy with obstruction of justice for allegedly trying to get Owens, one of five former HealthSouth finance chiefs to implicate Scrushy in the fraud, to lie in sworn testimony to the Securities and Exchange Commission.
But Bowdre said prosecutors had no evidence that Scrushy committed obstruction except their own “spin” on Scrushy’s talks with Owens.
“The government’s proof is inadequate,” said Bowdre, saying she would have to throw out the verdict even if jurors convicted Scrushy of the crime.
Bowdre previously granted defense motions to throw out eight charges from the 58-count indictment against Scrushy. He still is charged with conspiracy and multiple fraud counts.
Testimony in the trial ended Wednesday in its 16th week after the defense finished its case without calling Scrushy to the stand.
During the hearing Thursday on defense motions to dismiss some of the charges, Bowdre repeatedly questioned key parts of the prosecutors’ case against Scrushy.
Some of Bowdre’s toughest questions focused on the obstruction charge, which accuses Scrushy of trying to sway the testimony of Owens during a conversation secretly recorded by Owens for the FBI.
Prosecutors claim the recording shows Scrushy tried to influence subordinates’ testimony to the Securities and Exchange Commission in 2003. At one point, Scrushy told Owens: “This conversation did not take place.”
But Bowdre challenged the government’s interpretation of the discussion as she agreed with defense claims that the conversation didn’t have anything to do with a massive fraud at HealthSouth so it wasn’t illegal.
Referring to a statement in which Scrushy referred to getting back to “accurate numbers,” Bowdre asked prosecutor Tamara Matthews in a skeptical tone: “What’s illegal about that?”
The prosecutor said the recording also showed Scrushy was excited that investigators were looking at matters unrelated to a massive accounting fraud at HealthSouth.
“Is there anything wrong with being excited that the SEC investigation is going in one direction and not another?” Bowdre asked.